NHPC - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 05 Nov 25, 7:43 am

Investment Rating: 3.9

⚡ NHPC Ltd is a stable long-term investment candidate with consistent profitability and dividend yield, though growth metrics and valuation suggest moderate upside. Ideal entry zone: ₹80–₹84. If already held, consider a 3–5 year horizon with exit near ₹90–₹95 or if ROE/ROCE stagnate.

🔷 Positive

• 📊 ROCE of 7.44% and ROE of 8.40%: Indicates steady capital efficiency for a utility company.
• 💰 Dividend yield of 2.22%: Attractive for income-focused investors.
• 📈 EPS of ₹3.12: Reflects consistent earnings performance.
• 📈 FII holding increased by 0.74%: Indicates rising foreign investor confidence.
• 📈 Quarterly PAT growth: ₹1,072 Cr. vs ₹894 Cr. (5.25% variation).

⚠️ Limitation

• 📉 PEG ratio of −7.56: Indicates unreliable valuation relative to growth.
• 📉 High debt-to-equity ratio (0.94): Reflects capital-intensive nature of operations.
• 📉 DII holding declined (−0.09%): May reflect cautious domestic sentiment.
• 📉 Volume below average: Indicates reduced market interest.

🚫 Company Negative News

• 📉 Q4 FY25 earnings call revealed flat net margins despite revenue surge, leading to a dip in stock price

  Investing.com India

  .

✅ Company Positive News

• ⚡ NHPC plans to commission three units of the Subansiri project by June 2025, expected to generate ₹4,000–₹4,500 Cr. annually

  Investing.com India

  .

• 📈 Included in a list of power stocks with up to 46% upside potential amid sector re-rating

  The Economic Times

  .

• 🌱 Expanding into solar, wind, and pumped storage projects to diversify renewable energy portfolio

  tradewatch360.com

  .

🏭 Industry

• 🔌 Operates in the power generation sector, benefiting from India’s clean energy transition and infrastructure push.
• 📉 Industry PE of 31.2 vs NHPC’s 27.3 suggests slight undervaluation.

🧾 Conclusion

• 📌 Ideal entry zone: ₹80–₹84 based on DMA and valuation support.
• ⏳ Holding period: 3–5 years to benefit from Subansiri commissioning and renewable expansion.
• 🚪 Exit strategy: Consider exit near ₹90–₹95 or if ROE/ROCE decline or debt levels rise further.

Sources

The Economic Times

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